South Korea pharmaceuticals market: $31 billion industry by 2018

The South Korea pharmaceuticals market reached a value of around $20 billion in 2012, growing from $14.5 billion in 2006 at a Compound Annual Growth Rate (CAGR) of 5.5%. The industry experienced slower year-on-year growth in 2009 and 2010 due to decreased raw material production. It is expected to grow at a CAGR of 7.6% to reach $31.1 billion in 2018. An increase in insurance coverage, the countrys aging population and favorable government initiatives are expected to drive the industrys growth in the future.

In 2011, the Ministry of Health and Welfare (MOHW) announced that it would cut prices of some 7,500 registered drugs by 14% to control spending on

drugs in the National Health Insurance (NHI) scheme by 2012.

The drugs exempt from these price reductions were:

â¢ Essential medicines, such as those included in the countrys drug shortage prevention program
â¢ Drugs manufactured by innovative pharmaceutical companies and produced by chemical synthesis
â¢ Medicines produced by fewer than three companies
â¢ A medicine priced lower than others with the same efficacy

The revisions have changed the pricing mechanism for new medicines from external reference pricing to negotiations between the National Health Insurance Corporation (NHIC) and pharmaceutical manufacturers, taking into account priceâvolume discounts. For medicines listed prior to January 1, 2012, prices were to be reassessed according to the revised pricing policy.

Rapid Development in the Field of Stem Cell Research in South Korea

South Korea can be considered a pioneer in the field of stem cell therapy. The country has approved products for indications such as Acute Myocardial Infarction (Hearticellgram â AMI), knee cartilage injury (Cartistem), and Crohns disease anal fistula (Cupistem). The country is rapidly developing the field of stem cell therapy and boasts a robust pipeline that witnesses active participation from pharmaceutical companies. South Korea stands among the top leaders in stem cell research across the globe. This has been made possible by strong government support and increased funding as stem cell research is considered the next growth engine for the economy. MOHW announced an investment of KRW33 billion ($33m) as its stem cell R&D budget of 2012, four times the amount invested in 2011. The increased investment is to be utilized in the commercialization of R&D to check the safety and efficacy of these treatment technologies. Previously, money had only been invested in basic research.

sBiosimilars to Become the Next Growth Engine for the Pharmaceutical Industry in South Korea

The South Korean government has set 22% of the global share in biosimilars as a target until 2020. To achieve this, the Korea Food and Drug Administration (KFDA) introduced regulatory guidelines for biosimilars in 2009 and the government created an $80m Biomedical Fund in the same year to provide financial assistance to local biotech companies for biosimilars R&D. The South Korean government is actively involved in the entire lifecycle of biosimilars. With an investment of $5 billion, the government has shaped the cities of Osong and Daegu to act as production hubs with high technical expertise.

The South Korean pharmaceutical market is the 10th largest pharmaceutical market, globally. The industry is highly fragmented, with almost all the domestic pharmaceutical companies having a strong portfolio of generic products rather than expensive, branded drugs. For the entire pharmaceutical industry, an increase in insurance coverage, an ageing population and favorable government initiatives are expected to drive future growth in the pharmaceutical industry.

Improved Intellectual Property Rights (IPR), changing demographics, and government support have contributed towards making the South Korean pharmaceutical industry attractive for multinational companies. The South Korean government has signed Free Trade Agreements (FTA) with the US, Europe and India that are aimed at improving the IPR framework in the country and making the pharmaceutical industry more attractive for foreign investment. The immediate effects of the FTA may not be positive in all respects for the generics-dominated domestic pharmaceutical industry. However, it is ultimately expected to bolster the South Korean pharmaceutical industry by increasing transparency in government policies and enforcement, and price competition in the private sector.

Report Overview

This report provides in-depth analysis of the trends, issues and challenges facing the South Korean pharmaceutical market. The report also provides competitive benchmarking for the countrys leading pharmaceutical companies and analyzes the M&A (Mergers and Acquisitions) and strategic partnerships that shape its pharmaceutical industry. It is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Researchs team of industry experts.

Scope

- The macroeconomic environment of the pharmaceutical industry in South Korea, covering demographic analysis, trends, drivers and barriers
- Important industry characteristics, including the regulatory authorities, drug pricing, spending, insurance and reimbursement
- Market analysis of segments such as prescription medicines, biotechnology and over-the-counter medicines
- Competitive profiling of major domestic and international companies operating in the South Korea pharmaceutical market
- Analyses of the licensing, partnership and M&A deals that took place between 2007 and 2012

Reasons to buy

- Develop market-entry and market-expansion strategies by identifying the leading segments poised for strong growth
- Devise a more specifically-tailored country strategy through understanding the key drivers and barriers for the pharmaceutical market
- Develop key strategic initiatives by understanding leading companies key focus areas
- Accelerate and strengthen your market position by identifying key companies for M&As and strategic partnerships

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